Five strategic challenges facing UK consulting firms

17 October 2017

The consulting industry is a landscape in transition. Consultancies face a broad range of opportunities to guide clients through an unfamiliar new landscape. However, in order to exploit them, they must adapt. To stay competitive, consulting firms will have to rethink their strategies: from their business models to the services they deliver, how they charge for them, the types of expertise they want to develop and the type of skills they hire. Dean Carroll, General Manager of Touchstone CRM, reflects on five strategic challenges that consultancies will have to tackle.

Adapting to new market opportunities 

The market for consultancy services is shifting as clients face new business challenges. In 2016, an analyst firm identified two major growth opportunities; one around risk and regulatory compliance, and the other around digital transformation, a market that has boomed to $23 billion globally. 

On the risk and regulation side, the market is polarised into two parts. The first is commoditised consulting, which makes up the bulk of the market and commands lower fees. For new and potentially disruptive areas of risk and regulation, however, clients still seek traditional, high-value, advice. Consulting firms need to understand what kind of advice their clients need, and adapt their skills, service delivery mechanisms and rates accordingly.

Digital transformation is the other big opportunity, and is growing fast as more client organisations recognise the need to approach “digital” from a top-down, strategic perspective. As digital transformation requires a blend of strategic consultancy and IT implementation; firms that have historically specialised in one or other area will have to restructure their model and operations to combine the two.

Five strategic challenges facing UK consulting firms

There’s no question that firms need to act, though. A firm that tries to keep charging high rates for what’s now seen as “commodity” consulting will find its clients drifting away to lower-cost providers. At the same time, if they don’t pay close attention to how demand is changing, firms risk missing out on big opportunities to consult around risk, regulatory change and digital transformation. Firms must keep a close eye on which services are popular and adapt their fees and expertise in line with changing client demands.

Proving digital transformation credentials

Digital transformation is a hot area of opportunity, but competition for contracts is fierce, and as the stakes are high for the client, the choice of consultant will be under intense scrutiny. Clients are much more likely to trust a consultancy firm that practises what it preaches – one that has clearly gone through a successful digital transformation of its own. If a client sees inefficiencies in your own business operations – if they call you and you don’t immediately respond, for example – they’ll find it hard to put their faith in your ability to lead their own transformation.

You need to show that your firm is agile, responsive and capable of using the latest advances in communication / collaboration, digital service delivery and data analytics to provide an outstanding customer experience.

Getting the right people and skills

With client needs changing, consulting firms require the right people and skills to deliver the new services that clients are demanding. Trawling the top universities for graduates is becoming less viable, as there is fierce competition among recruiters, driving up salaries. Crucially, it also tends to produce a homogeneous workforce – at a time when clients are crying out for diverse viewpoints and new ways of thinking and approaching problems.

Firms looking for innovative people with creative ideas and unconventional skillsets may well find that talent elsewhere, in less-tapped markets – among the newly-retired, for example, or parents returning from a career break. In May last year, reported that “one study concluded that employees of diverse organisations are 75% more likely to see their innovative ideas brought to life", while other research by Grant Thornton, revealed that cultural diversity benefits strategy execution and governance.

Strategic tips for consulting firms

Without a diversely skilled workforce, consultancies will be forced to compromise on deals they can win, and on the level of service they can offer. Their market will become limited, and staff will become frustrated in not being able to extend their abilities and expertise into other areas that will offer the client value. Staff may feel like they are providing a transactional service rather than a value based one, which can be demoralising. At the same time, competitors who build a diverse workforce will be able to offer greater breadth, depth and quality of service.

Collaborating to differentiate 

No firm is an island – at least not if it wants to keep up with changing client expectations. Today’s clients are demanding more services that firms can deliver with their own inhouse expertise. Digital transformation, for example, requires a mix of strategic consultancy and hands-on technological implementation, and many firms don’t offer both things under the same roof. At the same time, specialist firms are springing up in niche areas like co-creation, service design and innovation management, but they lack the service breadth or industry clout to win really big contracts.

A win-win solution, identified by Source Global Research in a November 2016 blog post, is for firms to collaborate to win and service clients who require a mix of specialist advice. As collaboration becomes more popular, consultancies that continue to go it alone will suffer in one of two ways. Either they’ll seriously limit the quality of service they can offer (if they only focus on delivering one specific type of service), or they’ll find themselves unable to meet their clients’ needs. They must embrace the need to collaborate and bring a greater value of service to their clients. Would a client choose to work with a firm when they can work with an alternative supplier who is able to address more than one of their pressing issues?

Becoming, and remaining, a trusted advisor

In a world where so much client communication takes place over digital channels, the value of the client/ consultant relationship can sometimes be forgotten. However, clients still need consultants who are trusted advisors – who take time to meet with them face to face, ask the right questions, listen to their needs, and make the effort to build rapport.

With limited time available, consultants need to know where their client-facing time can be spent most valuably. They need to be able to spot opportunities to develop and nurture the trusted advisor relationship for the mutual benefit of the client and the firm. In a competitive landscape, if the consultant isn’t taking steps to maintain and grow relationships with valuable clients, another firm will be waiting in the wings to step in.

For more information on the strategic challenges UK management consulting firms are facing, and how CRM can help, download the full thought paper by Touchstone CRM and see the related article 'Trends and challenges in the management consulting industry'.

Dean Carroll is General Manager of Touchstone CRM, a UK provider of CRM products & consulting services and Microsoft CRM Gold Partner. Prior to joining Touchstone CRM, Carroll worked for Microsoft and Vodafone, holding a range of senior management and consulting roles.

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Accenture's push into the creative sector is an identity crisis

18 April 2019

In its latest push into the creative sector, Accenture Interactive acquired New York and London-based ad agency Droga5 earlier this month, adding illustrious clients such as HBO, Amazon and The New York Times to its roster of clients. With the latest in a long line of similar purchases, Accenture Interactive further demonstrated its ambition of becoming the globe’s leading trusted advisor to chief marketing officers. Yet according to Ben Langdon, Chairman of Class35, Accenture’s strategy may be heading in the wrong direction.

A press release on Accenture’s website announcing the acquisition sits next to a quote stating that “brands aren’t built through advertising” – a huge contradiction from a consultancy firm hell-bent on becoming the ‘CMO agency of choice’. It’s not alone of course. The entire consulting industry wants a piece of the creative pie right now. In addition to Accenture Interactive, recent acquisitions by PwC Digital, IBM iX, and Deloitte Digital meant that in 2017, for the first time ever, four of the world’s ten largest creative agencies were consultancies.

So just what it is that Accenture wants to achieve from this? For one thing, it’s clearly trying to be a digital transformation business. A one-stop creative shop rivalling more traditional models, it wants to lure CMOs in with the promise of lower ad spend and a “more impactful customer experience”. At the same time, though, it’s still in thrall to those same slinky, shiny branding and advertising agencies it’s attempting to disrupt. The Droga5 acquisition and that of Karmarama a few years before are both testament to this.

There’s a fundamental problem with this, though. Digital transformation businesses don’t sell to CMOs. These people have enough on their plates trying to transform their own marketing skills in order to keep up with an ever-changing market – they just don’t have the time or the energy to concern themselves with digitally transforming a whole business. If Accenture’s purpose is digital transformation, then going after creative agencies is barking up the wrong tree.Is Accenture's push into the creative sector an identity crisis?

Worlds apart

Perhaps more importantly, these two industries are worlds apart in terms of the way they think. Creative agencies are all about ideas, campaigns and consumers. Digital businesses, on the other hand, are customer-driven – they think in terms such as lifetime value, measurement, and efficiency. Customer-led thinking is an entirely different beast to consumer-led thinking.

The reality is that the arrival of digital and an all-encompassing obsession with technology, measurement and social has led to the death of agencies in a reductive, zero-sum, efficiency-focused battle with brands. Indeed, agencies have become so obsessed with the latest tech fads, they’re beginning to forget how brands work. Worse still, they’re beginning to forget how brands are built. And, by forgetting, they’re destroying their own values.

Killing creativity

All things considered, it really feels to me as though Accenture is a chip leader in a game it doesn’t understand. Expensive acquisitions like these show that they’ve got the big money, but they don’t appear to have any idea what they’re doing with it. Take talent, for example. The best talent in the creative industry right now is out in the market; it’s not tied to any one agency. Both agencies might well be at the top of their game, but why would a consulting firm waste so much money on buying them when they could hire high-quality creative talent on a contingent basis instead?

As their presence in the top 10 creative agencies shows, there is a growing trend in which Accenture, like many of the other big players, are buying up agencies as if they were nothing more than keywords. What they’re really buying, though, is a collection of credentials, clients and IP. Unfortunately, the talent that created those credentials aren’t going to stay at the business, the clients that hired the agency in the first place won’t be interested in buying what is basically just another part of Accenture, and the IP never really existed to begin with.

Droga5, for example, was one of the few agencies that did great brand work the old-fashioned way – undoubtedly something that made it attractive to Accenture in the first place. The irony, though, is that by leading it further away from the way of working that made it so special, the consulting giant will kill its creativity.

“Accenture Interactive has been dazzled by its ambitions to become the CMO agency of record…. But, in flashing its cash, it is spending millions on acquiring nothing of any value.”

If pressed, the recently acquired agency staff at Accenture will tell you just how dysfunctional the new arrangement is. They’re largely unfulfilled. Rarely do they feel their work has any sort of meaning or purpose. What’s more, the different disciplines have found little or no common ground, and find it hard to work together as a cohesive whole. It’s not surprising, then, to see talented people leaving in droves.

Beyond the window dressing 

It’s clear, then, that consulting firms and creative agencies are no easy bedfellows. But in his company’s defence, Accenture Interactive’s Senior Managing Director for North America, Glen Hartman, described its culture as being “far, far away from what a stereotypical consulting firm would look like. Our office and studios look a lot like Droga5’s.”

In demonstrating a belief that office design equates to workplace culture, this statement serves as an illustration of how confused Accenture is right now. It wants to justify its new strategy so badly, it’s started dressing like a creative agency. But if you look beyond the window dressing and see that you and your partners are speaking a different language with a different purpose, selling to different people in a different market, there’s no getting away from the fact that you’re different.

Accenture Interactive has been dazzled by its ambitions to become the CMO agency of record, and it wants to dazzle others with its new direction. But, in flashing its cash, it is spending millions on acquiring nothing of any value.

Related: Space between consulting firms and creative agencies is converging.